Third Rocket Launch Fails, but VC Cash for SpaceX Pours in Anyway

The view from SpaceX's Falcon 1 rocket shortly before video transmission terminated two minutes and 20 seconds into its third test flight on August 2. (Photograph Courtesy of SpaceX)

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Private launch leader SpaceX—the startup founded by PayPal mogul Elon Musk to boost payloads for commercial industry and even NASA—failed on Saturday to launch its Falcon 1 rocket into outer space ... for the third time. While the first stage of the launch went off as planned, two of the rocket's stages failed to separate, and the Falcon 1 was lost before it could reach orbit. The rocket had been carrying two small NASA satellites, one Department of Defense satellite and the ashes of 208 people whose loved ones wanted to "bury" them in orbit—including the ashes of James Doohan, the actor who played Scotty on Star Trek.

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Musk, who's invested more than $100 million in the company, was disappointed but not deterred. "On the plus side, the flight of our first stage, with the new Merlin 1C engine that will be used in Falcon 9, was picture perfect," he wrote in a message to employees. "Unfortunately, a problem occurred with stage separation, causing the stages to be held together. SpaceX will not skip a beat in execution going forward."

Indeed, just two days later, SpaceX announced that it had received a $20 million investment from the Founders Fund, a venture capital firm that is partially managed by other PayPal co-founders. Less than two months ago, one prominent VC partner insisted to PM that quick business reactions to the private space industry was "one of the big advantages" of investing in companies like SpaceX; whether this latest round of funding was related to Saturday's test was unclear.

But the injection of cash comes at a crucial time for the company. SpaceX's original goal was to create the world's lowest cost space launcher, but with three failed launches in as many years, some prognosticators are already wondering who will want to contribute cargo to the Falcon 1's fourth launch attempt. After all, SpaceX is developing more ambitious rockets such as the Falcon 9, a medium- to heavy-lift rocket whose mission will be to re-supply the International Space Station—if it beats out competitor Orbital Sciences for a NASA contract. —S.E. Kramer